Long Calls (Bullish Options Strategy)

The Long Calls strategy is the most basic options strategy and it involves the buying of Call
options - at an appropriate strike price and of an appropriate expiration term.

A Call buyer almost always possesses a bullish bias towards near term action on the underlying asset. Often, s/he also desires an expansion, or at least stability, in the level of implied volatility on the relevant options.

While a bullishly biased trader (and possibly even a trader with a neutral bias) can finesse his/her level of aggression in the trade by choosing calls that possess a preferred state of moneyness, a bearishly biased trader will not find much use for this strategy.

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Negative Divergence on Weekly MACD

(4/23/10) This is an update to the situation on the weekly chart of the S&P-500, which is our current 'Chart In Focus.'.

The potential negative divergence on MACD, on the chart of SPX, was first highlighted five weeks ago. The sell signal had not completed itself at that point and it actually still hasn't. But, strictly speaking, it has not become defunct as yet, as well.

Until/unless MACD makes a new high (surpasses the peak made in January), the divergence will continue and, as such, traders need to be prepared for the ramifications of the sell signal, were it to be confirmed. A confirmation will take place if/when MACD breaks below the intervening trough (see thin line drawn in MACD pane on chart). 

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